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Washington - The US Treasury raised its estimate of the net cost to US taxpayers of rescuing the country's auto industry by $3.3bn, as the weak economy restrains the industry's rebound.

The Treasury told Congress in a new report seen on its website Monday that the cost of the government's massive bailout of Detroit in the economic crisis of 2007-2008 would hit $25bn, based on figures to May 31.

That compared a forecast loss of $21.7bn based on figures to February 29, according to Treasury data.

The US government rescued General Motors and Chrysler at the height of the financial crisis, pouring $80bn into the two.

Both have since graduated from the program, and are making solid profits on reasonably strong auto sales.

But the Treasury continues to prop up GM's former financing arm, now dubbed Ally Financial, which lost $898m in the second quarter mainly due to the bankruptcy of its home mortgage arm, forced by its huge book of defaulted home loans.

A year ago, when hopes were that the economy was solidly recovering and the housing market might turn around, the Treasury was projecting losses on the industry bailout of just $14.3bn.

Treasury spokesperson Matt Anderson defended the bailout as having had a broader impact on reviving the overall economy.

"The auto industry rescue helped save more than one million jobs throughout our nation's industrial heartland and is expected to cost far less than many had feared during the height of the crisis," he said.

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